Moses v. CashCall, Inc., No. 14-1195 (4th Cir. 2015)
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Oteria Moses borrowed $1,000 under a loan agreement that was illegal under North Carolina law. When Moses filed for Chapter 13 bankruptcy protection, CashCall, Inc., the loan servicer, filed a proof of claim. Moses subsequently filed an adversary proceeding against CashCall seeking a declaration that the loan was illegal and also seeking money damages for CashCall’s allegedly illegal debt collection activities. CashCall filed a motion to compel arbitration. The bankruptcy court denied CashCall’s motion to compel arbitration and retained jurisdiction over both Moses’ first claim for declaratory relief and second claim for damages. On appeal, the district court affirmed. The Fourth Circuit affirmed in part and reversed in part, holding that the district court (1) did not err in affirming the bankruptcy court’s exercise of jurisdiction to retain in bankruptcy Moses’ first claim; but (2) erred in retaining in bankruptcy Moses’ claim for damages and denying CashCall’s motion to compel arbitration of that claim, as this claim was not constitutionally core. Remanded with instruction to grant CashCall’s motion to compel arbitration on Moses’ second claim for damages.
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PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 14-1195 OTERIA Q. MOSES, Plaintiff - Appellee, v. CASHCALL, INC., Defendant - Appellant, -----------------------------NATIONAL ASSOCIATION OF CHAPTER 13 TRUSTEES; ASSOCIATION OF CONSUMER BANKRUPTCY ATTORNEYS, NATIONAL Amici Supporting Appellee. Appeal from the United States District Court for the Eastern District of North Carolina, at Greenville. Terrence W. Boyle, District Judge. (4:13-cv-00223-BO) Argued: October 30, 2014 Decided: March 16, 2015 Before NIEMEYER and GREGORY, Circuit Judges, and DAVIS, Senior Circuit Judge. Affirmed in part and reversed in part and remanded by per curiam opinion. Judge Niemeyer wrote the opinion for the court in Parts I, II.A, and III, in which Judge Gregory joined. Judge Niemeyer wrote a separate opinion in Part II.B dissenting from the judgment in part. Judge Gregory wrote a separate opinion, concurring in the judgment. Judge Davis wrote a separate opinion, concurring in the judgment in part and dissenting in part. ARGUED: Hayden J. Silver, III, WOMBLE CARLYLE SANDRIDGE & RICE, LLP, Raleigh, North Carolina, for Appellant. Matthew W.H. Wessler, PUBLIC JUSTICE, P.C., Washington, D.C., for Appellee. ON BRIEF: Raymond M. Bennett, Jesse A. Schaefer, WOMBLE CARLYLE SANDRIDGE & RICE, LLP, Raleigh, North Carolina, for Appellant. Adrian M. Lapas, STRICKLAND, LAPAS, AGNER & ASSOCIATES, Goldsboro, North Carolina; Leah M. Nicholls, PUBLIC JUSTICE, P.C., Washington, D.C., for Appellee. John Fletcher Logan, Chapter 13 Standing Trustee, Eastern District of North Carolina, OFFICE OF THE CHAPTER 13 TRUSTEE, Raleigh, North Carolina, for Amicus National Association of Chapter 13 Trustees. Tara Twomey, Geoff Walsh, NATIONAL CONSUMER BANKRUPTCY RIGHTS CENTER, San Jose, California, for Amicus National Association of Consumer Bankruptcy Attorneys. 2 PER CURIAM: This bankruptcy appeal presents the issue of whether two claims, one for declaratory relief and one for money damages, asserted by debtor Oteria Moses in an adversary proceeding, are subject to jurisdiction CashCall, second arbitration. The over claim the first Inc. to compel claim, it made bankruptcy and arbitration. recommended court denied With findings the retained motion respect of to fact of the and conclusions of law, likewise to retain jurisdiction over the claim and deny the motion to compel arbitration. On appeal from the bankruptcy court, the district court affirmed the bankruptcy court’s denial of the motion to compel arbitration as to the first claim and, itself, denied the motion to compel arbitration with respect to the second claim. On appeal, we hold, for the reasons given by Judge Niemeyer in Parts I, II.A, and III of his opinion, in which Judge Gregory joined, that the district court did not err in affirming the bankruptcy court’s exercise of discretion to retain bankruptcy Moses’ first claim for declaratory relief. in We also hold, however, that the district court erred in retaining in bankruptcy Moses’ claim for damages under the North Carolina Debt Collection Act and arbitration of that claim. denying CashCall’s motion to compel Judge Gregory and Judge Davis wrote 3 separate opinions concurring in that judgment. Judge Niemeyer wrote a separate opinion on that issue, dissenting. Accordingly, the judgment of the district court is affirmed in part and reversed in part, and this matter is remanded to the district court with instructions to grant CashCall’s motion to compel arbitration on Moses’ second claim for damages. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH INSTRUCTIONS 4 NIEMEYER, Circuit Judge, writing for the court in Parts I, II.A, and III; and writing separately in Part II.B dissenting from the judgment in part: To overcome Goldsboro, North financial Carolina, difficulties, borrowed $1,000 Oteria from Moses of Western Sky Financial, LLC, signing a consumer loan agreement in which she promised to repay Western Sky $1,500 and 149% interest, for an effective interest rate of 233.10% per annum. In signing the loan agreement, she agreed to make payments totaling $4,893. While such a loan agreement was clearly illegal under North Carolina law, as it provided for an interest rate nearly 15 times the maximum allowable rate, Western Sky specified in the agreement that Indian tribal law would apply and that any dispute under the agreement would be resolved by arbitration conducted by a representative of the Cheyenne River Sioux Tribe. When Moses sought protection in a Chapter 13 bankruptcy proceeding, CashCall, Inc., the loan servicer, filed a proof of claim, illegal which and Moses void. opposed on the Moses also ground filed an that the adversary loan was proceeding against CashCall (1) to declare the loan illegal and void and (2) to obtain damages for collection activities. In bankruptcy court’s CashCall’s a allegedly strategic adjudication of attempt Moses’ illegal to claims, avoid debt the CashCall sought to withdraw its proof of claim, but the bankruptcy court denied its request. CashCall simultaneously sought to dismiss 5 the adversary arbitration, district action which court or the to stay the bankruptcy refused to proceeding court review also the and compel denied. bankruptcy The court’s interlocutory order denying CashCall’s motion to withdraw its proof of claim but agreed to review the bankruptcy court’s order denying CashCall’s motion to dismiss or compel arbitration. From the district court’s order affirming, CashCall filed this appeal. We conclude declaratory that judgment resolution that the loan of Moses’ is claim illegal under for a North Carolina law could directly impact the claims against her estate and that sending substantially this interfere claim with to Moses’ tribal arbitration efforts to would reorganize. Thus, we hold that the district court did not err in affirming the bankruptcy’s court’s exercise of discretion to retain in bankruptcy Moses’ claim for a declaratory judgment. Writing separately for myself in Part II.B, I would also affirm the district court’s exercise of discretion to retain in bankruptcy Moses’ claim to obtain damages for CashCall’s efforts to collect an allegedly illegal debt. That claim presents the exact same question as Moses’ claim for a declaratory judgment -- namely, whether the loan agreement is invalid. Consequently, splitting the damages claim from the declaratory judgment claim and sending it to arbitration will be extremely inefficient, 6 will present collateral estoppel concerns, and will waste resources that Moses could otherwise use to repay her debts. Such concerns are heightened in light of the fact that courts have called the tribal arbitration procedure specified in the loan agreement “illusory,” “a sham,” and “unconscionable.” See, e.g., Jackson v. Payday Fin., LLC, 764 F.3d 765, 768, 778-79 (7th Cir. 2014). Therefore, I believe that the district court did not abuse its discretion in declining to send Moses’ damages claim to arbitration. I Facing financial difficulties, Moses signed a Western Sky Consumer Loan Agreement (the “Loan Agreement”) on May 10, 2012, promising to pay Western Sky “or any subsequent holder” $1,500, together with 149% interest. Upon signing the Loan Agreement, Western Sky gave her $1,000 in cash and “retained” $500 as a “prepaid finance charge/origination fee.” In the Loan Agreement’s “Truth in Lending Act Disclosure Statement,” Western Sky stated that the annual percentage rate for the loan was 233.10% and that the amount of all payments that would be made “as scheduled” would be $4,893.14. The 233.10% interest rate disclosed in the Loan Agreement far exceeded the 16% maximum rate allowed by North Carolina law. Western Sky, which gave its address in the Loan Agreement as a post office box in Timber Lake, South Dakota, was not 7 licensed to make loans in North Carolina, as required by North Carolina law. The Loan Agreement provided, however, that it was “governed by the Indian Commerce Clause of the Constitution of the United States of America and the laws of the Cheyenne River Sioux Tribe” and that “no United States state or federal law applies to this Agreement.” The Loan Agreement also provided that any disputes relating to it were conducted to by be the resolved Cheyenne by arbitration, River Sioux “which Tribal shall Nation by be an authorized representative” (emphasis added), and it gave Moses the right to designate Association or JAMS either “to the administer American the Arbitration arbitration” in accordance with its rules and procedures “to the extent that those rules and procedures do not contradict either the law of the Cheyenne River Sioux Tribe or the express terms of this Agreement to arbitrate.” In signing the Agreement, Moses also agreed that she could elect to have the arbitration take place either on tribal land or within 30 miles of her residence, but she agreed that if she elected the latter, this “accommodation” would not “relinquish[] or waive[] . . . the Sioux Tribe’s sovereign status or immunity.” Cheyenne River Courts that have considered loan agreements similar to the one at issue here have found that the Cheyenne River Sioux Tribe has no laws or facilities for arbitration and that the arbitration procedure 8 specified is a “sham from stem to stern.” Jackson, 768 F.3d at 779; see also Inetianbor v. CashCall, Inc., 768 F.3d 1346, 1354 (11th Cir. 2014); Heldt v. Payday Fin., LLC, 12 F. Supp. 3d 1170, 1191 (D.S.D. 2014). Three days after signing the Loan Agreement, Moses received a notice from Western Sky that the Agreement had been sold to WS Funding, LLC, a subsidiary of CashCall, Inc., and would be serviced by CashCall. On August 1, 2012, less than three months after signing the Loan Agreement and after having made only one payment on it, Moses filed a Chapter 13 bankruptcy petition in the Eastern District of North Carolina to reorganize her financial affairs. One week later, CashCall filed a proof of claim in the bankruptcy proceeding, asserting that Moses owed it $1,929.02 as of August 1. Moses objected to the proof of claim, contending that “the loan obligation was void and not enforceable in North Carolina” pursuant to two North Carolina statutes that prohibit unlicensed lending, see N.C. Gen. Stat. § 53-166(a), and limit interest rates to 16% per annum, see id. § 24-1.1(c). initiated an adversary proceeding by filing a She also two-count complaint seeking, in her first count, a declaratory judgment that the loan was “void ab initio” under North Carolina law and, in her second, damages against CashCall under the North Carolina 9 Debt Collection Act, id. §§ 75-50 to 75-56, for taking actions “to collect a debt that was not permitted under law.” On October 25, 2012, the bankruptcy court confirmed Moses’ Chapter 13 plan without objection. Moses to repay administrative fully claims all The approved plan called for secured, over a priority five-year unsecured, period but and did not anticipate that there would be sufficient funds to repay any general unsecured claims. After approval of the plan, but while the adversary proceeding was pending, CashCall filed simultaneous motions in the bankruptcy prejudice and court to to withdraw dismiss Moses’ its proof adversary of claim proceeding with without prejudice or, in the alternative, to stay the proceeding and compel Moses to arbitrate her Agreement’s arbitration clause. claims pursuant to the Loan In its motion to withdraw its proof of claim, CashCall stated that it “no longer wish[ed] to pursue its Proof of Claim and voluntarily abandon[ed] its claim for the outstanding balance of the loan to the Debtor.” But it did not consent to a finding that its loan was illegal and void under North Carolina law, as Moses alleged in her objection to the proof proceeding. proceeding of claim and Because against in Moses CashCall, her complaint had already CashCall was in the adversary an adversary filed not authorized withdraw its proof of claim without court approval. 10 to See Fed. R. Bankr. P. 3006. Moses objected to CashCall’s motion to withdraw its proof of claim, maintaining that CashCall, which had filed 118 similar proofs of claim in the Eastern District of North Carolina to recover unsecured debts, sought to withdraw its proof of claim in her case only after she had challenged its practices “in an attempt to divest [the bankruptcy court] of jurisdiction” to hear her claims against it. Following a hearing, the bankruptcy separate orders dated January 3, 2013. court entered two In the first, it denied CashCall’s motion to dismiss the complaint or to stay and compel arbitration. In doing so, the court concluded that Moses’ first claim in the complaint, which requested a declaratory judgment that CashCall’s loan was void, was a core bankruptcy proceeding, as it involved the “allowance or disallowance of claims against the estate,” citing 28 U.S.C. § 157(b)(2)(B). As to Moses’ second claim, which sought damages under the North Carolina Debt Collection Act, the court concluded that the claim was non-core, over which it “lack[ed] constitutional authority to enter final judgment” and could therefore only recommend findings of fact and conclusions of law for a decision by the district court, citing id. § 157(c)(1). In the second order of January 3, the bankruptcy court denied CashCall’s motion to withdraw its proof of claim, finding that withdrawal “would cause prejudice to the 11 Debtor by eliminating this Court’s jurisdiction over any causes of action related to the claim.” CashCall sought leave from the district court to file interlocutory appeals with respect to both January 3 orders, as required by 28 U.S.C. § 158(a)(3), acknowledging that the district court had “discretionary jurisdiction to hear appeals from interlocutory district court rulings granted interlocutory order arbitration, but of Bankruptcy CashCall denying it the its denied leave motion CashCall to Courts.” to appeal dismiss leave to The or the compel appeal the interlocutory order denying its motion to withdraw its proof of claim. On the appeal of the order denying CashCall’s motion to dismiss or compel arbitration, the district court affirmed the bankruptcy court’s order by order dated February 4, 2014. CashCall filed a notice of appeal to this court “from the judgment and order of the District Court . . . entered in this case on February 4, 2014, affirming an order of the Bankruptcy Court for the Eastern District of North Carolina that denied CashCall’s motion to dismiss or stay and compel arbitration of the underlying adversary proceeding.” II In her complaint in the asserted two claims for relief. declaratory judgment that adversary Moses In the first, she sought a CashCall’s 12 proceeding, loan was illegal and unenforceable, in violation of N.C. Gen. Stat. § 24-1.1(c) and § 53-166(a). CashCall’s In her alleged second claim, violation of she the sought North damages Carolina for Debt Collection Act, N.C. Gen. Stat. §§ 75-51, 75-54, asserting that CashCall sought to enforce a debt that was void under North Carolina law. The district jurisdiction court over ruled Moses’ that first the bankruptcy claim court had it was because “constitutionally core under Stern v. Marshall, 131 S. Ct. 2594 (2011),” and “CashCall [did] not challenge this finding.” district court then exercised its discretion to keep The Moses’ second claim -- that CashCall violated the North Carolina Debt Collection Act -- in the bankruptcy case because sending it to arbitration “would frustrate, rather than facilitate, the efficiency favored by arbitration and could potentially lead to inconsistent results.” The court noted that “[t]he countervailing policy of the bankruptcy code is . . . greatly served by allowing the bankruptcy court to consider both claims together and to enter findings of fact and conclusions of law on Moses’ non-core claim.” CashCall contending on challenges appeal that the district both should be sent to arbitration. the core court’s and conclusions, non-core claims This is an expansion of the position that it took in the district court, where it argued 13 only that Moses’ claim for damages under the North Carolina Debt Collection Act was a non-core proceeding and that “non-core proceedings are subject to arbitration, even in bankruptcy.” It now maintains that if both claims are sent to arbitration, “none of the matters to be decided will delay or diminish [Moses’] opportunity increase argues, for the a discharge, payments arbitration she alter is would the required not Chapter 13 to conflict make.” with Plan, or Thus, it the policies underlying the Bankruptcy Code. Moses argues to the contrary, noting that both of her claims are premised on the invalidity of the Loan Agreement and contending that the resolution of those claims would “directly impact[] the financial claims on reorganization bankruptcy proceedings.” the -- estate the She and raison the plan d’etre maintains of for [her] Chapter 13 therefore that arbitration would conflict with the Bankruptcy Code’s purposes. The underlying principles that are applicable here are not in dispute. Bankruptcy courts may decide core bankruptcy claims, which include the “allowance or disallowance of claims against the estate” and “counterclaims by the estate against persons filing claims § 157(b)(2)(B)-(C). against the estate.” 28 U.S.C. A bankruptcy court may also hear related non-core claims, but it cannot finally resolve them and must 14 instead submit proposed findings of fact and conclusions of law to the district court. Id. § 157(c)(1). The Supreme Court has modified these statutory assignments of responsibility, holding that Article III of the Constitution prohibits bankruptcy courts from issuing final orders regarding statutorily core claims unless they “stem[] from the bankruptcy itself or would necessarily be resolved in the claims allowance process.” Stern, 131 S. Ct. at 2618. And the Court has subsequently held that when a bankruptcy court is faced with a claim that is statutorily core but constitutionally non-core -a so-called “Stern claim” -- it must treat the claim as if it were statutorily non-core, submitting proposed findings of fact and conclusions of law to the district court for de novo review. Exec. Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165, 2173 (2014). Here, there is no dispute that Moses’ first claim, which seeks to declare that CashCall’s loan is unenforceable, is a statutorily “allowance 28 U.S.C. core or claim because disallowance § 157(b)(2)(B). such of It an claims is also action against involves the the estate.” constitutionally core, because the validity of the Loan Agreement would “necessarily be resolved” in adjudicating CashCall’s proof of claim and Moses’ objections thereto. Stern, 131 S. Ct. at 2618; see also, e.g., TP, Inc. v. Bank of Am., N.A. (In re TP, Inc.), 479 B.R. 373, 15 385 (Bankr. E.D.N.C. 2012) (holding that “a counterclaim by the estate based in state law” will necessarily be resolved in ruling on a proof of claim if it “seek[s] to directly reduce or recoup the amount claimed”); Pulaski v. Dakota Fin., LLC (In re Pulaski), 475 B.R. 681, 687 (Bankr. W.D. Wis. 2012) (holding that an objection to a proof of claim based on violations of state law was constitutionally core); In re Olde Prairie Block Owner, LLC, 457 B.R. 692, 698 (Bankr. N.D. Ill. 2011). Moses’ second claim, which seeks damages for CashCall’s violation of the North Carolina Debt Collection Act, is also statutorily core because it is a “counterclaim[] by the estate against [a] person[] filing [a] claim[] against the estate.” See 28 U.S.C. § 157(b)(2)(C); see also, e.g., Burns v. Dennis (In re Southeast Materials, Inc.), 467 B.R. 337, 360 (Bankr. M.D.N.C. 2012) (holding that a cause of action seeking damages for a creditor’s unfair or deceptive trade practices, which had no bearing on the allowance or disallowance of a proof of claim, was a counterclaim by the estate); SJI, Inc. v. Staehnke (In re SJI, Inc.), 442 B.R. 690, 693 (Bankr. D. Minn. 2010) (holding that a cause of action seeking damages for a creditor’s breach of contract was a counterclaim by the estate). claim is not constitutionally core. were to determine that the But the second Even if a bankruptcy court underlying Loan Agreement was illegal, it would still need to determine whether an effort to 16 collect an illegal debt would inherently violate Carolina Debt Collection Act, as Moses alleges. the North Thus, Moses’ claim would not “necessarily be resolved in the claims allowance process.” Stern, 131 S. Ct. at 2618; see also id. at 2616-17 (distinguishing the case before the Court, in which “the Bankruptcy Court was required to and did make several factual and legal determinations that were not ‘disposed of in passing on objections’ to [a] proof of claim,” id. at 2617 (quoting Katchen v. Landy, 382 U.S. 323, 332 n.9 (1966)), from a case where the legal elements of the claim and counterclaim were so overlapping that once the bankruptcy judge ruled on the creditor’s proof of claim “nothing remain[ed] for adjudication,” id. at 2616 (quoting Katchen, quotation marks omitted)). be treated as if it 382 U.S. at 334) (internal Therefore, Moses’ second claim must were statutorily non-core. See Exec. Benefits Ins. Agency, 134 S. Ct. at 2173. In sum, while the two claims in Moses’ complaint in the adversary proceeding are statutorily core claims, only the first claim is constitutionally core. CashCall’s argument that both Moses’ core and non-core claims should be sent to arbitration rests essentially on its argument that the strong policy favoring arbitration outweighs the conflicting policies of the Bankruptcy Code in this case. 17 To be sure, the arbitration policies implemented by the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-14, are to be robustly followed. See, e.g., CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669 (2012) (“[The FAA] establishes ‘a liberal federal policy favoring arbitration agreements’” (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983))); Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985) (“The preeminent concern of Congress in passing the [FAA] was to enforce private agreements into which parties had entered, and that concern requires that we rigorously enforce agreements to arbitrate . . .”). “Congress intended bankruptcy courts expeditiously estate.” with to so grant that all At the same time, however, comprehensive they matters might connected jurisdiction deal efficiently with the to and bankruptcy Celotex Corp. v. Edwards, 514 U.S. 300, 308 (1995) (internal quotation marks and citation omitted). And in cases where tension arises between the FAA and another statute, the Supreme Court has provided a framework for resolving it, holding that the party seeking to prevent enforcement of an applicable arbitration agreement must show that “Congress has evinced an intention to preclude a waiver statutory rights at issue.” 531 U.S. 79, 90 (2000). of judicial remedies for the Green Tree Fin. Corp. v. Randolph, That intent must be deducible from (1) the statute’s text; (2) its legislative history; or (3) “an 18 inherent conflict between underlying purposes.” arbitration and the statute’s Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 227 (1987); see also Gilmer v. Interstate/Johnson Lane Corp., 895 F.2d 195, 197 (4th Cir. 1990), aff’d, 500 U.S. 20 (1991). Where such an intent can be deduced, the court of first impression has discretion to decide whether to withhold arbitration, a decision that is subject to review for abuse of that discretion. See Cont’l Ins. Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.), 671 F.3d 1011, 1019-20 (9th Cir. 2012); Mintze v. Am. Gen. Fin. Servs., Inc. (In re Mintze), 434 F.3d 222, 228 (3d Cir. 2006); Gandy v. Gandy (In re Gandy), 299 F.3d 489, 494 (5th Cir. 2002). As to the constitutionally core claim in this case -- Moses’ claim for a declaratory judgment -the bankruptcy court is the court of first impression to exercise discretion whether to withhold arbitration, but as to the non-core claim -- Moses’ claim for damages -- the district court is the court of first impression to exercise such discretion. Moses does not contend that the Bankruptcy Code or its surrounding legislative history demonstrates an intent to create an exception to the FAA. claims to arbitration Rather, she argues that sending her would Bankruptcy Code’s purposes. inherently conflict with the Because Moses’ complaint contains 19 both a constitutionally core and a non-core claim, each claim is analyzed separately. A With respect to Moses’ first claim, the constitutionally core claim, we conclude that sending it to arbitration would pose an inherent conflict with the Bankruptcy Code and that the district court did not err in affirming the bankruptcy court’s exercise of discretion in retaining it in bankruptcy. While arbitration agreements are to be rigorously enforced, bankruptcy too represents a fundamental public policy. Grounded in the Constitution, bankruptcy provides debtors with a fresh start and creditors debtor’s assets. with an equitable distribution of the To those ends, a principal purpose of the Bankruptcy Code is to provide debtors and creditors with “the prompt and effectual [debtor’s] estate.” 514 U.S. administration and settlement of the Katchen, 382 U.S. at 328; see also Celotex, at 308. Similarly, a principal purpose of the Bankruptcy Code is also to centralize disputes over the debtor’s assets and obligations in one forum, thus protecting both debtors and creditors from piecemeal litigation and conflicting judgments. See Phillips v. Congelton, L.L.C. (In re White Mountain Mining Co.), 403 F.3d 164, 169-70 (4th Cir. 2005); A.H. Robbins Co. v. Piccinin, 788 F.2d 994, 998 (4th Cir. 1986). “Ease and centrality of administration 20 are thus foundational characteristics of bankruptcy law.” French v. Liebmann (In re French), 440 F.3d 145, 154-55 (4th Cir. 2006) (Wilkinson, J., concurring). Inherently invoking these policies, Moses filed a Chapter 13 petition under the Bankruptcy Code and a five-year plan to reorganize her financial affairs, which the bankruptcy court approved in October 2012. after the debtor proposes In any Chapter 13 plan, even and the court approves a specific schedule of payments over a period of years, the plan “remains subject decreased to modification ability to pay for reasons according to including plan, as a debtor’s well as the debtor’s increased ability to pay,” Carroll v. Logan, 735 F.3d 147, 151 (4th Cir. 2013), until the completion of plan payments, Pliler v. Stearns, 747 F.3d 260, 266 (4th Cir. 2014). It is thus apparent that resolution of Moses’ claim that the Loan Agreement she entered into with Western Sky was illegal could directly impact claims against her estate and her plan for financial reorganization, notwithstanding the fact that the plan was confirmed in October 2012. If a tribunal were to hold that CashCall’s loan is valid, CashCall could petition the bankruptcy court as assets. 148 (4th an “allowed unsecured creditor” to share in Moses’ See Murphy v. O’Donnell (In re Murphy), 474 F.3d 143, Cir. 2007) (noting that plan modification can be initiated by “the debtor, the Chapter 13 trustee, or an allowed 21 unsecured creditor”). And the fact that unsecured creditors are currently anticipated to receive nothing under Moses’ confirmed plan does not mean that they never will. at 265 (noting that creditors may See Pliler, 747 F.3d gain from a debtor’s Chapter 13 reorganization “even if the debtor[] ha[s] zero or negative disposable income at the time of plan confirmation,” because “Chapter 13 debtors can and do benefit from windfalls such as inheritances or other unforeseeable income after plan confirmation closed”). but before their Chapter 13 proceedings are Under these circumstances, ordering arbitration of a dispute that directly pertains to Moses’ plan for reorganization would “substantially reorganize.” (holding interfere with [her] efforts to Phillips, 403 F.3d at 170; see also id. at 169 that “[a]rbitration is inconsistent with [the Bankruptcy Code’s policy of] centralized decision-making because permitting an arbitrator debtor-creditor rights to decide contingent a upon core an issue would arbitrator’s make ruling rather than the ruling of the bankruptcy judge assigned to hear the debtor’s case” (emphasis added) (internal quotation marks and citation omitted)). Therefore, we conclude that forcing Moses to arbitrate her constitutionally core claim would inherently conflict with the purposes of the Bankruptcy Code and that the district court did not err in affirming the bankruptcy 22 court’s exercise of discretion in denying CashCall’s motion to dismiss or stay and compel arbitration of that claim. NIEMEYER, Circuit Judge, writing separately and dissenting from the judgment in part in this Part II.B. B Nevertheless, court erred arbitration. in the majority declining to concludes send Moses’ that the non-core district claim to Judge Gregory concludes that Moses failed to meet her burden of showing that CashCall’s statutory right to the enforcement of arbitration agreements should be trumped by adjudication of her non-core claim in a bankruptcy court and therefore that the bankruptcy court “ha[d] refuse to arbitrate [the] non-core claim.” no discretion Post, at 49. to He insists that splitting Moses’ core and non-core claims -- so that the bankruptcy court can adjudicate her core claim and a representative of the Cheyenne River Sioux Tribe can adjudicate her non-core claim -- would not substantially interfere with Moses’s efforts to reorganize, despite the fact that the main element of Agreement, Moses’ will non-core necessarily claim, be the legality determined by of the the Loan bankruptcy court in ruling on Moses’ core claim and on her objection to CashCall’s proof of claim. Writing separately, Judge Davis would hold that CashCall’s abandonment of its proof of claim renders Moses’ core claim moot and eliminates any justification 23 for retaining jurisdiction over Moses’ non-core claim in the bankruptcy proceedings, despite the fact that because we lack jurisdiction to revisit the denial of CashCall’s motion to withdraw its proof of claim, as we hold in Part III, post, at 34-45, the proof of claim remains to be decided by the bankruptcy court. I believe that splitting Moses’ closely related claims and sending Moses’ non-core claim to a questionable and perhaps illusory arbitration proceeding would inherently conflict with the purposes of the Bankruptcy Code, and therefore I dissent from the court’s judgment insofar as it holds that the district court abused its discretion in retaining jurisdiction over ancillary to Moses’ non-core claim. Even though non-core claims are reorganization, it is apparent that they can nonetheless affect a debtor’s claims with to the efforts to arbitration debtor’s reorganize can, chance Chapter 13 reorganization. in to and given that sending circumstances, complete a fair and non-core interfere efficient Therefore, with core and non-core claims alike, courts are required to inquire into the nature of the claim and the facts of the specific bankruptcy to determine whether enforcing arbitration would inherently conflict with the purposes of the Bankruptcy Code. See Cont’l Ins., 671 F.3d at 1021 (“[T]he core/non-core distinction, though relevant, is 24 not alone dispositive”); Mintze, 434 F.3d at 229 (“The core/noncore distinction does not . . . affect whether a bankruptcy court has the discretion to deny enforcement of an arbitration agreement”). core In addition, when a court is presented with both a claim proceeding, and the a non-core discretion to claim in retain a the single non-core adversary claim can depend on the strength of its relationship with the core claim. Here, if a separate tribunal were to award Moses damages for CashCall’s efforts to collect an illegal loan, the increase in Moses’ ability to pay should accrue to the other unsecured creditors. 243 (4th See Arnold v. Weast (In re Arnold), 869 F.2d 240, Cir. 1989) (“When a debtor’s financial fortunes improve, the creditors should share some of the wealth”). But the many questions surrounding the Loan Agreement’s arbitration procedure raise doubts that arbitration would conclude in time for Moses’ creditors to seek modification of Moses’ Chapter 13 plan so that they could share in any recovery. The Loan conducted authorized dispute by Agreement the provides Cheyenne representative rules.” It also River in that arbitration Sioux accordance provides that Tribal with “shall Nation its arbitration by be an consumer shall be administered by the American Arbitration Association, JAMS, or another organization agreed upon by the parties. Thus, before arbitration could even begin, litigation over the arbitration 25 procedure at 1191 would seem (noting likely. that Accord because no Heldt, party 12 had F. Supp. identified 3d an “‘authorized representative’ of the Cheyenne River Sioux Tribal Nation [who] is an arbitrator in the [American Arbitration Association] or JAMS system,” the arbitration agreement left a “conundrum” addition, as to courts who would reviewing perform Western the Sky arbitration). loan agreements In with language similar to that in the Loan Agreement in this case have found that the Cheyenne River Sioux Tribe does not authorize arbitration and consequently has no authorized arbitrators or consumer dispute rules. See Jackson, 764 F.3d at 779 (“The arbitration clause here is void not simply because of a strong possibility of arbitrator bias, but because it provides that a decision is to be made under a process that is a sham from stem to stern”); Inetianbor, 768 F.3d at 1354 (similar); Heldt, 12 F. Supp. 3d at 1192 (“[T]he unique circumstances of this case could give rise to . . . [a] ‘procedural nightmare’ and [a] lack of ‘orderly administration of justice’” (quoting Nat’l Farmers Union Ins. Co. v. Crow Tribe of Indians, 471 U.S. 845, 856 (1985))). My colleagues suggest that the record is not sufficiently developed for us to make conclusions about the specified tribal arbitration. I submit, however, that we need not make findings on that issue. Rather, the doubt already expressed by other 26 courts about the legitimacy and adequacy of the Loan Agreement’s tribal arbitration mechanism indicates at the very least that the issue will be the subject of additional litigation. See Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989) (“[F]ederal courts, in appropriate circumstances, may take notice of proceedings proceedings (internal have a quotation in direct marks other courts, . . . relation and to citation matters omitted)). if at those issue” Thus, it might be years before any resolution of Moses’ non-core claim can be obtained. which an Indeed, it is not hard to imagine scenarios in arbitral award would come after October 2017, when Moses’ Chapter 13 plan will have terminated, preventing Moses’ creditors from petitioning for plan modification. Such delays with respect to the determination of the validity of a claim made against one of Moses’ creditors will not only interfere with the “the prompt and effectual administration and settlement of the [debtor’s] estate,” a principal purpose of the Bankruptcy Code, Katchen, 382 U.S. at 328, but also prejudice the rights of creditors to share in any increase in Moses’ estate. In addition, it hardly undermines the policy favoring arbitration to deny arbitration where there are “no rules, guidelines, or guarantees of fairness.” Jackson, 764 F.3d at 779. 27 More importantly, Moses’ non-core claim is directly tied to her claim. 1 core CashCall’s Carolina Moses efforts Debt to alleges collect Collection in the Act her non-core claim debt violated the because the underlying that North loan obligation was illegal, the very issue presented by her core claim. Therefore, separating her two claims will force an arbitrator and the bankruptcy judge separately to decide the validity of the underlying debt. That scenario inherently conflicts with the purposes of the Bankruptcy Code for several reasons. First, having two tribunals adjudicate the identical issue is inefficient. CashCall argues that efficiency concerns are not a valid basis for ignoring the FAA, noting that the Supreme Court has held that the FAA “requires district courts to compel arbitration of pendent arbitrable claims . . . even where the 1 Judge Gregory argues that “[t]he non-core litigation will likely require detailed and time-consuming findings regarding CashCall’s conduct in trying to collect on the loan,” post at 54, noting that Moses’ complaint alleges that CashCall “has willfully engaged in other and further violations” of the North Carolina Debt Collection Act, “as may be shown through discovery and proved at trial.” But the only factual claims that Moses makes in support of damages are that CashCall “threaten[ed] to draft funds from [her] account on a loan obligation that was illegal”; that CashCall “ma[de] telephone calls and threaten[ed] to take other actions to collect a debt that was not permitted under law”; and that CashCall “deceptively represent[ed] . . . that the alleged debt owing was a valid debt when such ‘contract for loan’ was . . . void ab initio.” (Emphasis added). 28 result would be the possibly inefficient maintenance of separate proceedings in different forums,” because the FAA is not chiefly concerned with “promot[ing] the expeditious resolution of claims,” Dean Witter Reynolds, 470 U.S. at 217, 219 (emphasis added); see also KPMG LLP v. Cocchi, 132 S. Ct. 23, 26 (2011) (per curiam) (similar). While this analysis governs in other contexts, intervening concerns of bankruptcy change the analysis here, because courts to between the Supreme consider Court’s whether arbitration and McMahon there the is an statute’s framework “inherent underlying directs conflict purposes,” 482 U.S. at 227, and the “expeditious resolution of claims” is at the heart of the Bankruptcy Code. Thus, as other courts of appeals have recognized, the arbitration calculus is different when bankruptcy is involved, efficiency concerns. requiring courts to consider See Ins. Co. of N. Am., 118 F.3d at 1069 n.21 (“[I]nsofar as efficiency concerns might present a genuine conflict between the Federal Arbitration Act and the [Bankruptcy] Code -- for example where substantial arbitration costs or severe delays would prejudice the rights of creditors or the ability represent at 1023 “judicial of a legitimate n.9 debtor reorganize -- considerations”); (observing economy to and that the general centralization of may well Ins., 671 F.3d proposition Cont’l they that disputes are not sufficient bases for nonenforcement of an otherwise applicable 29 arbitration clause . . . does not hold in the bankruptcy context”); Gandy, 299 F.3d at 499 (“[E]fficiency concerns may be legitimate efficient considerations resolution in of the claims bankruptcy and context, conservation where of the bankruptcy estate assets are integral purposes of the Bankruptcy Code” (citing Ins. Co. of N. Am., 118 F.3d at 1069 n.21)). In sum, while efficiency is not considered in determining whether to withhold arbitration in other contexts, it is relevant where, as here, the Bankruptcy Code is involved. Eber (In re Eber), 687 F.3d 1123, 1131 Accord Ackerman v. (9th Cir. 2012) (distinguishing KPMG because it “was not a bankruptcy case”). To be sure, the efficiency from “centralization [may] not, in and of itself, [be] a valid reason to deny arbitration,” as Judge Gregory observes, decentralization would post, be at 56, but particularly where, as here, inefficient, an arbitration agreement should give way. Second, bifurcating Moses’ claims will inherently conflict with the purposes of the Bankruptcy Code because an arbitration proceeding could come to a judgment before the bankruptcy court ruling and inappropriately bind the bankruptcy court on the validity of CashCall’s Loan Agreement, a constitutionally core issue for the bankruptcy court to decide. See Phillips, 403 F.3d at 169 (“[P]ermitting an arbitrator to decide a core issue would make debtor-creditor rights 30 ‘contingent upon an arbitrator’s ruling’ rather than the ruling of the bankruptcy judge assigned to hear the debtor’s case” (quoting Note, Jurisdiction in Bankruptcy Proceedings: A Test Case for Implied Repeal of the Federal Arbitration Act, 117 Harv. L. Rev. 2296, 2307 (2004))); Ackerman, 687 F.3d at 1131 (“We find unpersuasive [the creditors’] argument that the bankruptcy court inappropriately denied them the opportunity to arbitrate because it was concerned about arbitrator’s decision”). being collaterally stopped by the And even if collateral estoppel were not to apply, bifurcation “could yield different results and subject parties to dichotomous obligations.” at 499. Judge Gregory’s suggestion that Gandy, 299 F.3d the district court could stay arbitration until it has ruled on Moses’ core claim, post, at 55, only highlights further the inefficiencies associated with bifurcating Moses’ claims. Third, the additional litigation costs inherent in being forced to litigate claims before two separate tribunals will harm Moses’ creditors by reducing the Moses has available to pay her debts. at 170 (holding that adversary proceeding Mountain’s efforts “ordering would to amount income that See Phillips, 403 F.3d arbitration substantially reorganize” of and staying interfere because the with White arbitration would “impose additional costs on the estate and divert the attention and time of the debtor[],” whereas 31 “allowing the adversary proceeding to go forward would ‘allow all creditors, owners and parties in interest to participate [in a centralized proceeding] at a minimum of cost’” (second alteration in original)); see also Kent L. Richland, Stern v. Marshall: A Dead End Marathon?, 28 Emory Bankr. Dev. J. 393, 413 (2012) (“Particularly where the bankruptcy estate is relatively small, keeping the entire matter in the bankruptcy court may be the only way to preserve the estate against excessive costs”). Moreover, at a more general level, courts have regularly refused to Gandy, the causes of state-law bifurcate debtor related initiated action created causes of core an and non-core adversary matters. proceeding by the Bankruptcy action for breach Code of as In alleging well fiduciary as duty, negligence, fraud, constructive trust, and breach of contract. The Fifth Circuit affirmed the district court’s refusal to divide the debtor’s case by sending some claims to arbitration because “[p]arallel proceedings would be wasteful and inefficient, and potentially could yield different results and subject parties to dichotomous obligations.” at 499. 2 Gandy, 299 F.3d Similarly, in Ackerman, the Ninth Circuit refused to 2 Judge Gregory argues that Gandy is distinguishable because the state-law claims in that case were “peripheral” or “inconsequential relative to the bankruptcy causes of action.” 299 F.3d at 497, 500. But the facts of this case are no different. Here, at the heart of Moses’ non-core claim is her 32 compel arbitration of a creditor’s claims for breach of contract, fraud, and breach of fiduciary duty because “allowing an arbitrator to decide issues that are so closely intertwined” with the creditor’s core claim that the underlying debt was not dischargeable “would ‘conflict with the underlying purposes of the Bankruptcy Ins., 671 F.3d Code.’” 687 at 1021). F.3d And at 1130-31 in (quoting Continental Cont’l Insurance, the Ninth Circuit held that because a creditor’s non-core breach of contract claim bankruptcy was challenging actions “inextricably that the intertwined” debtor with the took in debtor’s bankruptcy plan confirmation, “adjudication of [the creditor’s] claim in any other forum other than a bankruptcy court would conflict with ‘fundamental bankruptcy policy.’” 671 F.3d at 1022 (internal quotation marks omitted). At bottom, I simply cannot see how the district court abused its discretion by keeping Moses’ non-core claim together allegation that the underlying loan agreement is unenforceable. If the district court agrees with that allegation, it need only resolve one simple legal question: Does the effort to collect an illegal debt inherently violate the North Carolina Debt Collection Act? If the answer to that question is yes, Moses is entitled to monetary damages, and her creditors are entitled to share in her newfound wealth. If the answer is no, Moses’ noncore claim must fail, because Moses has pleaded no facts suggesting that CashCall’s debt collection practices were otherwise unfair, deceptive, coercive, or unlawful. Thus, as in Gandy, a core bankruptcy matter -- here, the validity of loan agreement -- predominates. 33 with the core claim for adjudication in the bankruptcy court in the circumstances of this case. I would therefore affirm. NIEMEYER, Circuit Judge, writing for the court: III To support his argument that the district court erred in keeping the related core and non-core claims in bankruptcy, Judge Davis, in his separate opinion concurring in the judgment in part and dissenting in part, would have us review the unappealed and unappealable interlocutory January 3, 2013 order issued by the bankruptcy court withdraw its proof of claim. denying CashCall’s motion to He finds this approach necessary in order to conclude that the district court erred in affirming the bankruptcy court’s order denying the motion to dismiss or compel abandons arbitration its proof because, of as claim he and reasons, releases “once Moses CashCall from her obligations under the loan agreement, the sine qua non of the bankruptcy court’s justification for retaining jurisdiction over Moses’s non-core claim evaporates; there is no core claim to remit to arbitration, and the only question is whether to compel arbitration on Moses’s non-core claim.” Post, at 68. But the only issue that CashCall has appealed -- and, indeed, that it could appeal -- is whether the district court erred in entering its order of February 4, 2014, affirming the bankruptcy court’s 34 ruling that together in CashCall’s claims. the related the bankruptcy motion to core and court dismiss or non-core claims and, that to compel be decided end, denying arbitration of those This is also the only issue that the parties briefed. Because we have no jurisdiction to review the bankruptcy court’s January 3 order and therefore no power to allow CashCall to withdraw its proof of claim, Moses’ core claim is not moot. In bankruptcy cases, courts of appeals have jurisdiction only over (1) “final decisions, judgments, orders, and decrees” of district courts, (2) interlocutory pursuant appeals from to 28 district U.S.C. § 158(d)(1); courts under the collateral-order doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949); (3) appeals from interlocutory or final orders of the bankruptcy court in which the bankruptcy court, the district court, or the parties acting jointly, certify an appeal and the court of appeals authorizes a direct appeal, pursuant to § 158(d)(2); and (4) interlocutory appeals in which a district court states in writing “[i] that an order not otherwise appealable . . . involves a controlling question of law as to which there is substantial ground for difference of opinion and [ii] that an immediate appeal from the order may materially advance the ultimate litigation,” 28 U.S.C. § 1292(b). determination of the See Legal Representatives for Future Claimants v. Aetna Cas. & Sur. Co. (In re Wallace & Gale 35 Co.), 72 F.3d 21, 24 (4th Cir. 1995). In addition, Congress has created limited exceptions to the final-judgment rule for orders implicating certain subjects. See, e.g., 9 U.S.C. § 16(a)(1)(A). 3 As CashCall itself recognized, the bankruptcy court’s order denying its motion interlocutory. to withdraw its proof of claim was Pursuant to § 158(a)(3), an interlocutory order of a bankruptcy court is reviewable by a district court only with that court’s permission. The district court here specifically denied CashCall permission to appeal the bankruptcy court’s order to it and accordingly the district court never reviewed the bankruptcy court’s order on the merits. 3 Thus, the To justify jurisdiction over an unappealed and unappealable order, Judge Davis relies on Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547 (2014). That case, however, is inapposite. There, after the Tenth Circuit declined to hear a discretionary appeal from an order denying a motion to remand a class action, the Supreme Court found no jurisdictional barrier to granting review of the denial of the leave-to-appeal application. But unlike the closely circumscribed grounds for courts of appeals’ jurisdiction in bankruptcy cases, the Supreme Court has jurisdiction to hear any “[c]ase[] in the courts of appeals.” 28 U.S.C. § 1254(1). As the Court explained, the leave-to-appeal application was at some point “in” the court of appeals, so the Supreme Court had jurisdiction over what the court of appeals did. Dart Cherokee Basin, 135 S. Ct. at 555. Our jurisdiction is not so plenary. Moreover, the Court emphasized not once, but twice, that neither party had questioned its jurisdiction and that it was addressing the issue only at the behest of an amicus curiae. Here, by contrast, neither party believed that the bankruptcy court’s order denying CashCall’s motion to withdraw its proof of claim was before this court on appeal. 36 district court proceedings never gave rise to a reviewable final order of the district court that we could review under § 158(d)(1) or to an interlocutory order of the district court that we could § 1292(b). review And § 158(d)(2). bankruptcy no under court Indeed, court’s the collateral-order ever CashCall order is made has a doctrine certification not suggested appealable under under that any or the possible formulation. Moreover, even if there were any question as to our lack of jurisdiction withdraw, over CashCall the order did not denying appeal CashCall’s that order. motion A to court of appeals only has jurisdiction over an order that has actually been appealed and presented to it. See Fed. R. App. P. 3–4; Smith v. Barry, 502 U.S. 244, 248 (1992) (“[Federal Rule of Appellate Procedure] 3’s dictates are jurisdictional in nature, and their satisfaction review. . . . Bowles v. is a [N]oncompliance is Russell, 551 U.S. prerequisite fatal 205, 214 to an to appellate appeal.”); (2007) (“[T]he cf. timely filing of a notice of appeal in a civil case is a jurisdictional requirement”). reference carefully the CashCall’s bankruptcy limiting the notice court’s scope of court’s February 4 order: 37 of appeal January 3 the appeal did order, to the not even instead district Defendant CashCall, Inc. appeals to the United States Court of Appeals for the Fourth Circuit from the judgment and order of the District Court for the Eastern District of North Carolina, entered in this case on February 4, 2014, affirming an order of the Bankruptcy Court for the Eastern District of North Carolina that denied CashCall’s motion to dismiss or stay and compel arbitration of the underlying adversary proceeding. (Emphasis added). And unsurprisingly, CashCall never addressed the merits of the bankruptcy court’s January 3 order in its briefing before this court. Cf. Bogart v. Chapell, 396 F.3d 548, (recognizing 555 (4th Cir. 2005) that in order to demonstrate that the appellee “had notice of [an] issue and the opportunity to fully brief it,” the appellant “needs to address the merits of a particular issue in her opening brief” (emphasis added)); Edwards v. City of Goldsboro, 178 F.3d 231, 241 n.6 (4th Cir. 1999) (stating that failure to raise a claim and the reasons therefore in the opening brief “triggers abandonment of that claim on appeal”). Despite the clear absence of any power to review the interlocutory order of the bankruptcy court, Judge Davis would hold that the doctrine of pendent appellate jurisdiction gives us jurisdiction over that order. applicable to the circumstances That doctrine, however, is not presented here for several reasons. First, there is no final judgment to which review of the bankruptcy court’s order could 38 be appended. In Swint v. Chambers Court County refused Commission, to apply 514 the U.S. doctrine 35 (1995), of the pendent Supreme appellant jurisdiction to consider an unappealable issue where the order to which that issue would be appended was an interlocutory order appealable only under the collateral-order doctrine. The Court explained that “[i]f courts of appeals had discretion to append to a Cohen-authorized appeal from a collateral order further rulings of a kind neither independently appealable nor certified by the district court, then the two-tiered arrangement § 1292(b) mandates would be severely undermined.” at 49-50 (“[A] jurisdiction collateral tickets”). that in courts would orders loosely encourage into allowing parties multi-issue to pendent appellate parlay Cohen-type interlocutory appeal To safeguard Congress’ mandate, the Swint Court held appeals only rule Id. at 47; see also id. have authorized by jurisdiction the to collateral-order consider claims doctrine, that “fall within Cohen’s collateral-order exception to the final-judgment rule.” 663 Id. at 49 (quoting Abney v. United States, 431 U.S. 651, (1977)) (internal quotation marks omitted). Here, the district court’s order affirming the denial of CashCall’s motion to dismiss or compel arbitration was an interlocutory order, and appellate jurisdiction over that order was authorized solely by 9 U.S.C. § 16(a)(1)(A), which permits an interlocutory appeal of an order refusing to stay an action pending arbitration. 39 See Thomson McKinnon Sec., Inc. v. Salter, 873 F.2d 1397, 1399 (11th Cir. 1989) (“Under [§ 16(a)(1)], interlocutory orders refusing to compel arbitration now are appealable -- even though they are not final within the meaning of 28 U.S.C. § 1291”); see also, e.g., Campbell v. Gen. Dynamics Gov’t Sys. Corp., 407 F.3d 546, 550 (1st Cir. 2005); Arnold v. Arnold Corp. -- Printed Communc’ns for Bus., 920 F.2d 1269, 1274 (6th Cir. 1990). To apply the doctrine of pendent appellate jurisdiction in this context would statutorily appeal, be to authorized precisely the sanction the interlocutory effect that conversion appeal the of into Swint a a Court narrow, full-blown sought to avoid -- i.e., the practical and flexible approach to pendent appellate review that Judge Davis would have us adopt. See Swint, 514 U.S. at 45 (noting that such an approach would be incompatible with “the statutory instructions Congress has given to control the timing of appellate proceedings”). Second, the concerns expressed in Swint are magnified in this case because the district court, acting under 28 U.S.C. § 158(a)(3), specifically denied CashCall leave to appeal the bankruptcy court’s interlocutory order to the district court. As the Second Circuit recognized in Gibson v. Kassover (In re Kassover), 343 F.3d 91, 95 (2d Cir. 2003), “[i]n requiring that a district decision on court the grant merits leave [in to appeal before § 158(a)(3)], 40 rendering Congress a surely intended to make the declining of such leave the end of the matter, save perhaps for the seeking of an extraordinary writ.” Were it otherwise, appellate review would proceed “without the benefit of a district court’s findings of fact and conclusions of law.” Id. Indeed, courts of appeals have regularly held that they lack jurisdiction to review issues in the analogous situation where a district court has declined to certify a question for interlocutory appeal to a court of appeals under § 1292(b). See Taylor v. Robertson, 879 F.2d 863 (4th Cir. 1989) (unpublished) (“As the district court expressly declined to issue the required certification, we deny the petition for an interlocutory appeal under § 1292(b)”); see also, e.g., In re Ford Motor Co., 344 (“Certification by prerequisite interlocutory to the F.3d 648, district 654 court review (7th is under a Cir. 2003) jurisdictional § 1292(b) . . .”); Mason v. Stallings, 82 F.3d 1007, 1010 (11th Cir. 1996) (“The district court in this case denied a § 1292(b) certification. Therefore, it is not open to us to reverse the denial of summary judgment . . . .”); Green v. Occidental Petrol. Corp., 541 F.2d 1335, 1338 (9th Cir. 1976) (“Concurrence of both the district court and the appellate court is necessary and we are without power to assume unilaterally an appeal under section 1292(b)”); In re Master Key Antitrust Litig., 528 F.2d 5, 8 (2d Cir. 1975) (“[The district court’s] refusal to certify the interlocutory 41 appeal of [its] rulings is, of course, not appealable . . .”); United States v. 687.30 Acres of Land, 451 F.2d 667, 670 (8th Cir. 1971) (“We have no jurisdiction to review the trial court’s denial of the § 1292(b) certificate”). In short, applying pendent appellate jurisdiction -- “an exception [to the finaljudgment requirement] of limited and narrow application,” Rux v. Republic of Sudan, 461 F.3d 461, 475 (4th Cir. 2006) -- to review an issue that the district court expressly refused to consider itself under § 158(a)(3) and that was never certified to us under § 158(d)(2) or § 1292(b) would circumvent the clear intent of Congress. Third, the bankruptcy court’s January 3 interlocutory order is not, as Judge Davis contends, inextricably intertwined with the district court’s February 4 order affirming the denial of CashCall’s motion to dismiss the adversary complaint or compel arbitration. Although jurisdiction is the available doctrine “when an of pendent issue is appellate ‘inextricably intertwined’ with a question that is the proper subject of an immediate appeal,” Rux, 461 F.3d at 475 (quoting Swint, 514 U.S. at 51), separate rulings are inextricably intertwined only if “the same specific question will underlie both the appealable and the non-appealable order,” Scott v. Family Dollar Stores, Inc., 733 F.3d (quoting Ealy v. 105, 111 Pinkerton (4th Gov’t 42 Cir. 2013) Servs., (emphasis Inc., 514 F. added) App’x 299, 309 (4th Cir. 2013) (per curiam)), cert. denied, 134 S. Ct. 2871 (2014). arbitration Here, CashCall’s presents the motion question of to dismiss whether or compel arbitration of Moses’ claim would substantially interfere with the purposes of the Bankruptcy Code. By contrast, review of CashCall’s motion to withdraw its proof of claim would require a court to consider the distinct question of whether withdrawal would cause Moses to suffer prejudice. Judge Davis, also recognizing that CashCall never included the bankruptcy court’s January 3 interlocutory order in its notice of appeal, asserts nonetheless that we have “discretion” to review that order, post, at 62, because notices of appeal are to be liberally construed, post, at 69 (citing Powell v. Symons, 680 F.3d 301, 306 n.2 (3d Cir. 2012)). But this case does not allow for any construction of the notice of appeal. CashCall’s notice of appeal was clear and explicit in limiting the appeal to the February 4 order. CashCall did not appeal the bankruptcy court’s January 3 interlocutory order, stating in its brief that it “simply cannot appeal that issue yet.” policy of document. liberal construction to We cannot invoke the create an entirely new That policy applies only when “a party files a notice of appeal ‘that is technically at variance with the letter of a procedural rule, . . . functional equivalent [but] of the what 43 the litigant’s rule action requires.’” is the United States v. Little, 392 F.3d 671, 681 (4th Cir. 2004) (quoting Torres v. Oakland Scavenger Co., 487 U.S. 312, 316-17 (1988)); see also Gunther v. E.I. du Pont de Nemours & Co., 255 F.2d 710, 717 (4th Cir. 1958) (“When it appears that adequate information is given by the notice, the appeal should not be dismissed for mistakes which do not mislead or prejudice the appellee”). Somehow reaching the merits of the bankruptcy court’s unappealed and unappealable January 3 order, Judge Davis would conclude denying that the CashCall’s bankruptcy motion court to abused withdraw its its discretion proof of in claim because, as he views it, Moses would not be prejudiced by the withdrawal. more Post, at 64-65. relevant bankruptcy equitable court. For He fails, however, to consider the considerations instance, CashCall presented issued a to loan the at nearly 15 times the maximum allowable interest rate under North Carolina law and then filed a proof of claim to collect Moses’ unpaid debt, just as it had done in 118 other cases in the Eastern District of North Carolina. Had Moses not objected to CashCall’s claim, CashCall would have been more than happy to use the federal courts to collect $1,929.02, which amounted to a 92.9% return on its investment over a period of less than three months. But as soon as Moses fought back, alleging that the Loan Agreement was issued in violation of state usury laws and seeking damages for CashCall’s efforts to collect an illegal 44 debt, CashCall attempted to withdraw its proof of claim in an effort to divest the bankruptcy court of jurisdiction and shunt Moses’ claims into tribal arbitration, causing additional costs and delays. CashCall’s gamesmanship could not have been clearer. Denying Moses the benefit of the bankruptcy forum and requiring her, with her meager funds, to challenge the questionable and perhaps even illusory tribal arbitration process and to try her case in another forum, only to bring back any proceeds to the bankruptcy court, would hardly serve equity. Bankruptcy courts are courts of equity, see IRS v. Levy (In re Landbank Equity Corp.), 973 F.2d 265, 271 (4th Cir. 1992), and as such, they should not practice. at the be required to give effect to this inequitable While Judge Davis states that he is not “blink[ing]” underlying motivations of CashCall’s transparently tactical decision to withdraw its proof of claim in this case as a means to pretermit the adversary proceeding, post, at 76, his stated position reveals precisely the opposite. At bottom, it is clear that the bankruptcy court’s order denying CashCall’s motion to withdraw its proof of claim is not before us and that the bankruptcy court still has jurisdiction to decide CashCall’s proof of claim and Moses’ objection to it. 45 GREGORY, Circuit Judge, concurring in the majority opinion in part, and concurring in the judgment: I agree with Judge Niemeyer’s majority opinion upholding the bankruptcy court’s claim declaratory for exercise of jurisdiction judgment. 1 Sending over Moses’ such a core claim to arbitration would indeed present an “inherent conflict” with the Bankruptcy Code insofar as the claim validity of a demand on Moses’ estate. seeks to determine the See Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 227 (1987) (allowing the nonenforcement of an arbitration agreement when the arbitration of a claim would present an “inherent conflict” with a “statute’s underlying purposes”). The claim, same, which however, demands cannot money be said damages for for Moses’ CashCall’s non-core alleged violations of the North Carolina Debt Collection Act (NCDCA), NC. Gen. Stat. §§ 75-50 to 56 (2012). failure of the non-core claim may Although the success or have ancillary effects on Moses’ bankruptcy – primarily through the enlargement of the underlying estate due to any damages received – any such results are simply bankruptcy, too to attenuated, constitute and an indeed “inherent 1 extrinsic conflict” to the with the I also join Part III of Judge Niemeyer’s opinion holding that we have no jurisdiction to review the bankruptcy court’s interlocutory order denying CashCall’s motion to withdraw its proof of claim. 46 Bankruptcy Code’s reorganization. purpose As the of facilitating bankruptcy judge an efficient himself observed regarding the non-core claim, “[t]hese damages are unrelated to the Defendant’s proof of claim and are only related to the bankruptcy case in that if successful, the bankruptcy estate will recover any non-exempt funds and disburse them to claims in accordance with the bankruptcy code.” J.A. 87. In such circumstances, Moses has failed to meet her burden of showing “that Congress intended to preclude a waiver remedies for the statutory rights at issue.” of judicial McMahon, 482 U.S. at 227; see also Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985) (observing that courts must “rigorously enforce agreements to arbitrate, . . . at least absent a countervailing policy manifested in another federal statute”); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983) (describing the “federal policy favoring arbitration agreements”). I would thus reverse the district court’s decision allowing Moses’ non-core claim to remain in the bankruptcy court. I. To begin with the obvious, a claim is constitutionally noncore because it is ancillary to the underlying bankruptcy. In recognition of that fact, a bankruptcy judge’s dominion over non-core claims is limited by 47 Article III, § 1 of the Constitution conclusions to of submitting law to the “proposed district findings court, review and issuance of final judgment.” for of fact that and court’s Stern v. Marshall, 131 S. Ct. 2594, 2602 (2011); see also id. at 2620 (holding that a bankruptcy judge’s authority is likewise limited for claims that are statutorily core but constitutionally non-core); see also N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 71 (1982) (describing the enforcement of non-core state-created private rights as separate and apart from “the restructuring of debtor-creditor relations”). Further, the Bankruptcy Code itself limits a bankruptcy judge’s authority to hear certain state law matters, even when the resolution of those matters may affect the underlying estate. See 28 U.S.C. § 1334(c)(2) (requiring that bankruptcy courts “abstain from hearing” certain non-core state law claims); 28 U.S.C. § 1334(c)(1) (providing that bankruptcy courts may “abstain[] from hearing a particular proceeding,” including core and non-core matters, “in the interest of comity with State courts or respect for State law”); see also Stern, 131 S. Ct. at 2619-20. The core/non-core distinction, however, is not mechanically dispositive in deciding whether a bankruptcy judge may refuse to send a claim to arbitration. See Cont’l Ins. Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.), 671 F.3d 1011, 1021 (9th Cir. 2012) (“We agree 48 that the core/non-core distinction, though relevant, is not alone dispositive.”); In re Mintze, 434 F.3d 222, 229 (3d Cir. 2006) (“The core/non-core distinction does not . . . affect whether a bankruptcy court has the discretion agreement.”). to deny enforcement of an arbitration Instead, what matters fundamentally is whether compelling arbitration for a claim would inherently undermine the Bankruptcy efficient Code’s animating reorganization “[c]entralization of purpose of an disputes of facilitating estate concerning a the through debtor’s the legal obligations . . . .” Phillips v. Congelton, LLC (In re White Mountain Mining Co.), 403 F.3d 164, 170 (4th Cir. 2005). Although the mere designation of a claim as non-core does not end the bankruptcy inquiry, courts I agree generally arbitrate a non-core claim. with have no our sister discretion circuits to that refuse to As the Ninth Circuit has observed, surveying other circuits: The core versus non-core distinction has been articulated by our sister circuits as follows: generally, bankruptcy judges do not have discretion to refuse to compel arbitration of non-core matters because they are generally only tangentially related to a bankruptcy case. Bankruptcy courts may, however, exercise discretion to refuse to compel arbitration of core bankruptcy matters, which implicate more pressing bankruptcy concerns. Yet, even as to core proceedings, the bankruptcy court will not have discretion to override an arbitration agreement unless it finds that the proceedings are based on provisions of the Bankruptcy Code that inherently conflict with the Arbitration Act or that arbitration of the claim 49 would necessarily Bankruptcy Code. jeopardize the objectives of the Ackerman v. Eber (In re Eber), 687 F.3d 1123, 1130 n.6 (9th Cir. 2012) (internal citations and quotation marks omitted); see also Crysen/Montenay Energy Co. v. Shell Oil Co. & Scallop Petroleum Co. (In re Crysen/Montenay Energy Co.), 226 F.3d 160, 166 (2d Cir. 2000) (embracing generally must stay the conclusion non-core “that bankruptcy proceedings in courts favor of arbitration”); Hays & Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 885 F.2d 1149, 1150, 1160 (3d Cir. 1989) (same); Whiting-Turner Contracting Co. v. Elec. Mach. Enters., Inc. (In re Elec. Mach. Enters., Inc.), 479 F.3d 791, 796 (11th Cir. 2007) (same); see also Fred Neufeld, Enforcement of Contractual Arbitration Agreements Under the Bankruptcy Code, 65 Am. Bankr. L.J. 525, 526 (1991) (arguing in support of the Third Circuit’s conclusion in Hays, 885 F.2d at 1150, that “bankruptcy courts do not have clauses the in discretion noncore to deny adversary enforcement proceedings of arbitration brought by the trustee”). Dissenting from the majority’s conclusion that Moses’ noncore claim should be sent to arbitration, Judge Niemeyer cites the Fifth Circuit’s decision in Gandy v. Gandy (In re Gandy), 299 F.3d 489 (5th Cir. 2002), as supporting the proposition that “courts have regularly refused to bifurcate related core and 50 non-core matters.” In Gandy, however, the Fifth Circuit went so far as to observe that “bankruptcy courts generally do not have discretion to decline to stay proceedings involving non-core matters.” Id. at 495 (emphasis added) (also observing that it is “universally accepted” that bankruptcy courts generally do not have such discretion); see also Hays, 885 F.2d at 1150, 1160. Instead, Gandy determined that a bankruptcy judge’s discretion primarily extends “to refuse to enforce an otherwise applicable arbitration agreement when the underlying nature of a proceeding derives exclusively from the provisions of the Bankruptcy Code and the arbitration of the proceeding conflicts with the purpose of the Code.” 299 F.3d at 495; see also Crysen/Montenay, 226 F.3d at 166 (“[T]he presumption in favor of arbitration bankruptcy could generally courts otherwise in be will trump adjudicating arbitrated.”). the lesser non-core interest proceedings Factually, Gandy of that involved “three causes of action that derive[d] entirely from the federal rights conferred by the Bankruptcy Code” and available outside of bankruptcy to the debtor. 497. were thus not 299 F.3d at 495, The debtor’s complaint, the court found, also implicated “non-bankruptcy contractual and tort issues in only the most peripheral manner.” omitted). Such concluded, were Id. at 497 non-bankruptcy simply (internal causes of “inconsequential 51 quotation action, relative the to marks court the bankruptcy causes of action.” Id. at 500. As discussed further below, the same cannot be said of Moses’ state-law claim under the NCDCA. II. A bankruptcy judge’s discretion to deny arbitration of noncore matters is thus necessarily narrow. As we suggested in Phillips in the context of a core proceeding, the discretion to deny arbitration should be limited to cases where arbitration would “substantially interfere[] with the debtor’s efforts to reorganize.” Phillips, 403 F.3d at 170. Paradigmatically, substantial interference occurs when the resolution of the claim will necessarily affect reorganization in a significant way, and arbitration will thus inherently conflict with the purposes of Bankruptcy Code. See id. In Phillips, for example, we confronted whether an individual was owed money by a debtor – a classic core claim. The debtor’s bankruptcy plan had yet to be approved, the core claim was “critical to . . . the plan of reorganization,” and sending the proceeding to arbitration would have jeopardized the reorganization process. Id. No such danger is present here, however, regarding Moses’ non-core claim under the state debt collector statute. Chapter 13 bankruptcy plan has already been Moses’ approved, and unsecured creditors like CashCall will likely receive nothing. See J.A. 42-50. Nonetheless, the district court affirmed the 52 bankruptcy court’s refusal to send the claim to arbitration, reasoning damages that the arising non-core out of claim the core “inextricably intertwined” with it. was essentially proceeding one and was for thus J.A. 127. It is true that Moses’ core and non-core actions share one common question. CashCall’s proof The of claim Consumer Finance Act. an allegation that core action was void seeks a declaration under the North that Carolina The non-core claim is based, in part, on CashCall sought to collect on an invalid debt, while also alleging that CashCall “has willfully engaged in other and further violations of the North Carolina Prohibited Acts by Debt Collector as may be shown through discovery and proved at trial.” J.A. 39. But the fact that the claims may share a question does not mean that arbitrating one of them will pose an inherent conflict with the efficient reorganization of a debtor’s estate. Although the district court itself provided no reasons why it believed such a conflict was inevitable, it suggested in one sentence that the potential for inefficiency and “inconsistent results” justified the bankruptcy court’s actions. J.A. 128. As for any potential inefficiency and delay, if the bankruptcy court retained jurisdiction over Moses’ non-core claim, it could only issue findings of fact and recommendations of law, which would then be subject to de novo review by the district court 53 before a final order could be entered. But if the claim went to arbitration, the arbitrator’s order would simply be subject to enforcement by the district court, distributed as part of the estate. 2 Furthermore, with the core underlying loan litigation will Moses’ claim, was non-core apart void likely in claim the any proceeds then See Hays, 885 F.2d at 1158. from require with shares the little question first place. detailed whether The and overlap the non-core time-consuming findings regarding CashCall’s conduct in trying to collect on the loan, other violations of the state statute, and damages like emotional distress. As the bankruptcy judge observed regarding the non-core claim, “[t]hese damages are unrelated to the Defendant’s proof of claim and are only related to the bankruptcy case in that if successful, the bankruptcy estate will recover any non-exempt funds and disburse them to claims in accordance with the bankruptcy code.” J.A. 87. Although the core and non-core claims may overlap in one respect, they cannot be said to be inextricably intertwined such that the denial of arbitration was proper. 2 As discussed further below, it is possible that the arbitration agreement is entirely unenforceable on its face, as Moses now argues, because of its tribal choice of law and forum selection provisions. Neither the bankruptcy court nor district court, however, made factual findings about the effect of those provisions in the loan agreement, and we cannot reach the issue on the record before us. 54 Moses additionally argues that arbitration of the non-core claim could proceedings substantially by allowing an interfere with the to decide arbitrator bankruptcy an issue inextricably interrelated with the core claim (the validity of the loan agreement) and thus potentially bind a bankruptcy judge through collateral speculative at estoppel. best. As Such the a danger, Supreme Court however, has is held, “arbitration proceedings will not necessarily have a preclusive effect on subsequent federal-court proceedings.” Dean Witter, 470 U.S. at 223 (citing McDonald v. West Branch, 466 U.S. 284 (1984)); see also Hays, 885 F.2d Witter to a bankruptcy context). at 1158-59 (applying Dean Further, the Court in Dean Witter noted that “courts may directly and effectively protect federal interests by determining the preclusive effect to be given to an arbitration proceeding.” Dean Witter, 470 U.S. at 223; see also Hays, 885 F.2d at 1158-59. Finally, to the extent that any danger of preclusion remains, a court may simply stay arbitration proceedings for some brief period until it has ruled on the underlying core claim. There these is thus circumstances no reason will to believe substantially that arbitration interfere with in Moses’ bankruptcy and present an inherent conflict with the purposes of the Bankruptcy Code. Indeed, the mere possibility of generic litigation-related exigencies, inherent in the act of litigating 55 in another forum, cannot justify the refusal to arbitrate a noncore claim. As the Third Circuit observed in Hays, Congress’ decision to restrict a bankruptcy court’s jurisdiction over noncore claims, and to require that certain claims be heard in state court, shows that centralization is not, in and of itself, a valid reason to deny arbitration. 885 F.2d at 1159-60. The court further concluded that “even if there were some potential for an adverse impact on the core proceeding [as a result of arbitration], such as inefficient delay, duplicative proceedings, or collateral estoppel effect, Hayes [sic] has not shown that it would be substantial enough to override the policy favoring arbitration.” Id. at 1158. I reach the same conclusion about three additional possible rationales for a refusal to send a claim to arbitration in these circumstances. First, the Fifth Circuit in Gandy determined that a bankruptcy judge may refuse to arbitrate state-law claims when those claims are “inconsequential” compared with any coreclaims. legal Gandy, 299 F.3d at 500. conclusion believe that about Moses’ inconsequential. seeks the CashCall, her including those of state for arbitrability non-core Whereas invalidation Without embracing Gandy’s an NCDCA Moses’ claim emotional 56 $1,929.02 seeks distress such cannot declaratory alleged claim of claims, be substantial and called judgment debt I action owed to damages, anxiety, and statutory penalties up to $4,000 per violation of the Act. 39, 87. J.A. As previously described, the state cause of action requires a court to make detailed determinations regarding CashCall’s conduct before Moses declared bankruptcy – apart from the single underlying shared loan - question regarding including the allegations illegality that of CashCall the “has willfully engaged in other and further violations of the [Act]” that go beyond attempting to collect an invalid debt. J.A. 39. Against is that backdrop, the state-law action not inconsequential, or entirely peripheral to the core claim. Second, Judge Niemeyer suggests that the bankruptcy court may have been justified because Moses’ estate could be enriched or depleted as a result of litigation. If Moses prevailed, the estate could potentially benefit from any damages received – a result that certainly would not frustrate creditors who could share in the spoils. And if she lost, the costs of unsuccessful litigation could partly deplete the estate. But if such generic considerations were enough to justify a denial of arbitration, there would be little limit to a bankruptcy judge’s discretion. Neither Phillips that result. the nor the Federal Arbitration Act countenance As previously observed, Phillips instead approved bankruptcy court’s refusal to send a core claim to arbitration only after finding that “the arbitration would have substantially interfered with 57 the debtor’s efforts to reorganize.” 403 F.3d at 170. There has been no such showing here. Third, Judge Niemeyer argues that our holding pays insufficient attention to the 800-pound gorilla lurking in the litigation, namely, the enforceability of the arbitration agreement itself. For the first time on appeal, Moses argues that arbitration the tribal agreement are illusory. provisions specified in the She specifically maintains that “there is no such thing as arbitration conducted by the Cheyenne River Sioux Tribe, there are no tribal representatives authorized to conduct arbitration, and there are no tribal consumer dispute rules.” Br. of Appellee 2. CashCall’s strategy, as Moses alleges, is thus to “shield its illegal scheme from any American court and any American law” by sending claims into “a legal black hole called tribal arbitration.” Id. at 2 (citing Heldt v. Payday Fin., LLC, No. CIV 13-3023-RAL, 2014 WL 1330924, at *21 (D.S.D. Mar. 31, 2014)). The choice of law and arbitration provisions in question indeed appear similar to others used by CashCall that have been increasingly scrutinized, and at times derided, by the courts. See Jackson v. Payday Fin., LLC, 764 F.3d 765, 774-76 (7th Cir. 2014) (refusing to compel arbitration under similar provisions); Inetianbor v. CashCall, Inc., 962 F. Supp. 2d 1303, 1308-09 (S.D. Fla. 2013) (finding a similar arbitration agreement to be 58 void); Heldt, 2014 WL 1330924, at *17-20 (enumerating pervasive problems with enforcement of a similar agreement). Moses, however, did not raise the issue before the district court or bankruptcy court, and those courts did not make any relevant factual findings about the nature of the loan agreement or its arbitration provisions. Further, CashCall argues in its reply brief that the provisions governing Moses’ agreement are substantially different from those that other courts have considered – an argument that Moses could not respond to and that we are not equipped to resolve. See In re Under Seal, 749 F.3d 276, 285 (4th Cir. 2014) (“Our settled rule is simple: [a]bsent exceptional circumstances, . . . we do not consider issues raised for the first time on appeal.” (internal quotation marks omitted, alterations in original)). Without more fulsome briefing and a more developed record, we simply cannot reach the enforceability of the agreement. Judge Niemeyer nonetheless argues that the mere prospect of additional justify litigation the arbitration. decision over not to enforceability send Moses’ may itself non-core help claim to In essence, such cart-preceding-horse logic would reject an arbitration agreement because the agreement may be challenged. length of arbitration The dissent “imagine[s] scenarios” in which the time it may agreement take could to litigate prevent 59 a Moses’ challenge of creditors the from sharing in any received. augmentation But substantially reorganization. and of imagined the estate conflicts inherently are interfere through not with damages enough a to debtor’s That is particularly the case here where Moses’ bankruptcy plan has already been approved. III. In sum, the refusal to send a non-core claim to arbitration requires more than a finding that arbitration would potentially conflict with the purposes of the Bankruptcy Code. conflict must implication the be inherent presumption and in “sufficient favor of to Rather, the override arbitration.” by U.S. Lines, Inc. v. Am. Steamship Owners Mut. Prot. & Indemnity Ass’n (In re U.S. Lines), 197 F.3d 631, 640 (2d Cir. 1999). On the facts before us, I conclude that Moses has failed to carry her burden to show such a conflict. 60 DAVIS, Senior Circuit Judge, concurring in the judgment in part and dissenting in part: The district court allowed a bankruptcy court to protect its jurisdiction over a state law claim by refusing to acknowledge that a proof of claim in the bankruptcy case had become moot by virtue of its abandonment and withdrawal by the creditor. I am constrained to reject this jurisdictional sleight of hand. Appellee Oteria Moses, faced with severe financial difficulties, obtained from Western Sky Financial, LLC (“Western Sky”) a $1,500 loan; Appellant, CashCall, Inc. (“CashCall”) is Western Sky’s successor-in-interest. Upon Moses’s filing of a bankruptcy petition, CashCall filed a proof of claim, seeking nearly $2,000 from Moses’s estate. adversary proceeding declaring the Consumer loan Finance in which agreement Act Moses objected and filed an she void (“NCCFA”) requested under and (2) the (1) a judgment North Carolina money damages for CashCall’s alleged violation of North Carolina’s Prohibited Acts by Debt Collectors statute (“North Carolina Debt Collection Act” or “NCDCA”). CashCall, explaining that it was abandoning its claim for the outstanding balance of the loan, filed a motion to withdraw its proof of claim and then, shortly after that, a motion to compel arbitration of the adversary proceeding. 61 The bankruptcy court denied both motions. Upon CashCall’s appeal, the district court denied CashCall’s motion for leave to appeal the denial of its motion affirmed to the withdraw its bankruptcy proof court’s of order claim, and refusing the to court compel arbitration. On appeal to this Court, CashCall challenges the bankruptcy court’s denial of its motion to compel arbitration. did not, denial however, of note leave to an appeal appeal the from the CashCall district bankruptcy disallowing withdrawal of its proof of claim. court’s court’s order At oral argument before this panel, while reiterating that it has abandoned its proof of claim, CashCall explained that it did not believe it could appeal to this Court the district court’s denial of leave to appeal. For the reasons stated below, I would elect to exercise our discretion to review the bankruptcy court’s denial of the motion to withdraw the proof of claim, reverse in part, vacate in part, and remand with instructions that the district court reverse the bankruptcy court’s denial of the motion to compel arbitration. I. When reviewing a district court’s judgment affirming a bankruptcy court’s order, we “consider directly the bankruptcy court’s findings of facts and conclusions of Alvarez, 733 F.3d 136, 140 (4th Cir. 2013). 62 law.” In re We review the bankruptcy court’s (as conclusions de novo. clear error. well Id. as the district court’s) legal Findings of fact are reviewed for Id. II. A. I look first to the bankruptcy court’s denial of CashCall’s motion to withdraw its proof of claim. Moses suggests that, despite CashCall’s representations to the bankruptcy court and to this Court that it has abandoned its claim on the loan, the bankruptcy court nevertheless withdraw the proof of claim. properly denied the motion to I cannot agree. Federal Rule of Bankruptcy Procedure 3006 provides that: If after a creditor has filed a proof of claim an objection is filed thereto or a complaint is filed against that creditor in an adversary proceeding, . . . the creditor may not withdraw the claim except on order of the court after a hearing on notice to the trustee or debtor in possession . . . . A motion to withdraw a proof of claim under Rule 3006 has been analogized to a motion under Federal Rule of Civil Procedure 41(a), and thus similar considerations govern both motions. See, e.g., In re Varona, 388 B.R. 705, 726 (E.D. Va. 2008); In re Kaiser Group Int’l, Inc., 272 B.R. 852, 855 (D. Del. 2002); In re 20/20 Sport, Inc., 200 B.R. 972, 979 (S.D.N.Y. 1996). “As with a [] motion [to voluntarily dismiss a civil action], a motion to withdraw a proof of claim is left to the court’s 63 discretion, which is ‘to be exercised with due regard to the legitimate interests of both [parties].’” In re Ogden New York Servs., 312 B.R. 729, 732 (S.D.N.Y. 2004) (quoting 20/20 Sport, Inc., 200 B.R. at 979). “In general, withdrawal should be granted unless the party opposing the motion can demonstrate that it would be legally prejudiced by the withdrawal.” Id.; see also In re Lowenschuss, 67 F.3d 1394, 1399–1400 (9th Cir. 1995). Here, Moses failed to demonstrate that she would be “legally prejudiced” by the withdrawal of CashCall’s proof of claim. The bankruptcy court reached the opposite conclusion by reasoning that “allowing CashCall to withdraw its claim would . . . eliminat[e] [the court’s] jurisdiction over any cases of action related to the claim,” and force Moses “to file an action in the General Court of Justice for the State of North Carolina or proceed with arbitration as required by the loan agreement.” J.A. 92. This was legal error; the bankruptcy court is simply incorrect that litigating arbitration her Moses would claims procedures in set suffer state out in cognizable prejudice by court or following the her loan agreement (as supplemented by the availability of judicial review after any arbitration proceedings). Cf. In re Armstrong, 215 B.R. 730, 732 (E.D. Ark. 1997); In re Cnty. of Orange, 203 B.R. 977, 982 (C.D. Cal. 1996). I would decline to hold, at least on the 64 record here, that United States it constitutes bankruptcy judge “prejudice” (as not to opposed to have some a other adjudicator) decide a state law claim between private parties. Given the absence of any legally cognizable prejudice to Moses should CashCall’s proof of claim be withdrawn, the bankruptcy court committed legal error and thereby abused its discretion in denying CashCall’s motion. See Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 555 (2014) (“A court ‘would necessarily abuse its discretion if it based its ruling on an erroneous view of the law.’” (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990))); Koon v. United States, 518 U.S. 81, 100 (1996) (“A district court by definition abuses its discretion when it makes an error of law.”). In so concluding, I observe that, although the district court denied leave to file an interlocutory appeal of the bankruptcy court’s order disallowing withdrawal of the proof of claim, and although CashCall did not include in its notice of appeal to this Court a challenge to the district court’s denial of leave to appeal the withdrawal motion, we may nevertheless assess the propriety of the bankruptcy court’s order. Cherokee, 135 S. Ct. at 555–56 (finding “no Cf. Dart jurisdictional barrier” to review of a district court’s order, even though the court of appeals denied leave to appeal that order). court must “rely on the parties 65 to frame the While the issues for decision,” Greenlaw v. United States, 554 U.S. 237, 243 (2008), the Supreme Court has long recognized that “a court may consider an issue ‘antecedent to . . . and ultimately dispositive of’ the dispute before it, even an issue the parties fail to identify and brief.” U.S. Nat’l Bank of Or. v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 447 (1993) (quoting Arcadia v. Ohio Power Co., 498 U.S. 73, 77 (1990) (alterations in original)). Under the pendent appellate jurisdiction exception to the final judgment requirement, “we retain the discretion to review issues that are not otherwise subject to immediate appeal when such issues are so interconnected with immediately appealable issues that they warrant concurrent review.” Rux v. Republic of Sudan, 461 F.3d 461, 475 (4th Cir. 2006). “Pendent appellate jurisdiction is an exception of limited and narrow application driven by considerations of need, rather than of efficiency,” and “is available only (1) when an issue is ‘inextricably intertwined’ with a question that is the proper subject of an immediate appeal; or (2) when review of a jurisdictionally insufficient issue is ‘necessary to ensure meaningful review’ of an immediately appealable issue.” Id. (quoting Swint v. Chambers Cnty. Comm’n, 514 U.S. 35, 50–51 (1995)). 1 1 Judge Niemeyer, relying on Swint, claims that pendent appellate jurisdiction is unavailable in this case, because “there is no final judgment to which review of the bankruptcy 66 Here, district we undoubtedly court’s affirmance have of jurisdiction the order refusing to compel arbitration. Co., 72 F.3d 21, 24 (4th Cir. bankruptcy to review court’s the final See In re Wallace & Gale 1995) (generally describing appealable orders in bankruptcy proceedings); see also Noohi v. Toll Bros., Inc., 708 F.3d 599, 604 (4th Cir. 2013) (“In short, a party may appeal the denial of a motion to stay an action concerning a matter that a written agreement has committed to arbitration.”). The question, then, is whether we may exercise pendent appellate jurisdiction to concurrently review for legal error the bankruptcy court’s order denying withdrawal of the proof of claim. The answer is yes. court’s order could be appended.” Ante, at 38 (emphasis in original). But Swint simply refused to recognize “‘pendent party’ appellate jurisdiction.” 514 U.S. at 51. In Swint, the Court concluded that “[t]he Eleventh Circuit’s authority immediately to review the District Court’s denial of the individual police officer defendants’ summary judgment motions [based on their alleged immunity from suit] did not include authority to review at once the unrelated question of the county commission’s liability.” Id. (emphasis added). In any event, the district court’s order affirming the bankruptcy court’s refusal to compel arbitration is, in function, a final order. The district court’s ruling pretermitted all arbitration proceedings, conclusively resolving a specific dispute within the larger case. See Mort Ranta v. Gorman, 721 F.3d 241, 246 (4th Cir. 2013) (“As we have recognized on many occasions, the concept of finality in bankruptcy traditionally has been applied in a ‘more pragmatic and less technical way’ than in other situations. . . . [W]e have held final and appealable a variety of orders that resolve a specific dispute within the larger case without dismissing the entire action or resolving all other issues.” (citations and internal quotation marks omitted)). 67 Whether the bankruptcy court properly denied leave to withdraw the proof of claim is “inextricably intertwined” with whether it properly refused to compel arbitration. not be more (explicitly) CashCall’s clear, and because the as district abandonment of both the bankruptcy court (implicitly) proof its This could of claim court recognized, and consequent release of Moses from her obligations under the loan agreement altogether abandons moots its Moses’s proof of core claim claim. and And, releases once Moses CashCall from her obligations under the loan agreement, the sine qua non of the bankruptcy court’s justification for retaining jurisdiction over Moses’s non-core claim evaporates; there is no core claim to remit to arbitration, and the only question is whether to compel arbitration on Moses’s non-core claim. Cf. EQT Prod. Co. v. Adair, 764 F.3d 347, 364–65 (4th Cir. 2014) (suggesting that pendent appellate jurisdiction is available when resolution of a pendent issue is necessary to resolve an issue properly before the court on appeal). Accordingly, I would elect to exercise pendent appellate jurisdiction over the bankruptcy court’s order denying withdrawal of the proof of claim. 2 2 Judge Niemeyer disagrees that the bankruptcy court’s order denying withdrawal of the proof of claim is inextricably intertwined with the district court’s order affirming the bankruptcy court’s refusal to compel arbitration. Ante, at 42– 43. I cannot reconcile this conclusion with his determination 68 Turning to whether CashCall properly designated this order for appeal, I note that “[n]otices of appeal . . . are liberally construed, and we can exercise jurisdiction over orders not specified in a notice of appeal if (1) there is a connection between the specified and unspecified orders; (2) the intention to appeal the unspecified order is apparent; and (3) the opposing party is not prejudiced and has a full opportunity to brief the issues.” Powell v. Symons, 680 F.3d 301, 306 n.2 (3d Cir. 2012) (citation and internal quotation marks omitted); see United States ex rel. Hefner v. Hackensack Univ. Med. Ctr., 495 F.3d 103, 108 n.1 (3d Cir. 2007) (exercising discretion to review an order not specified in the notice of appeal, as there was a “definite connection” between that order and an order that had been specified); see also MLC Auto., LLC v. Town of Southern Pines, 532 F.3d 269, 279–80 (4th Cir. 2008) (recognizing that notices of appeal are to be liberally construed, and that a party may demonstrate an intent to appeal an order not specified in the notice of appeal, as long as the appellee is not prejudiced by the appellant’s failure to specifically note that order). that Moses’s core and non-core claims are so closely intertwined that they dare not be disaggregated. 69 As already discussed above, there is undoubtedly a close connection between the bankruptcy court’s order on CashCall’s motion to withdraw its proof of claim CashCall’s motion to compel arbitration. and its order on Additionally, CashCall made clear its desire to appeal the bankruptcy court’s order on its withdrawal motion, as it stated time and again that it had abandoned its proof of claim and district court to appeal the denial. sought leave before the Moses, therefore, was on notice that we may take up this issue and, indeed, argued before this panel that the denial of leave to appeal the bankruptcy court’s order precluded our review. In any bankruptcy event, court’s to conclude order on that we may CashCall’s not motion review to the withdraw suborns its abuse of discretion and permits it, in essence, to solve a problem that does not exist: by denying the motion to withdraw the proof of claim, the bankruptcy court insisted on deciding the abstract question of the validity and enforceability of an abandoned loan agreement, and relatedly, whether CashCall despite the fact may receive that seeking any such award. an CashCall award from indicated it Moses’s was no estate, longer Cf. Dart Cherokee Basin Operating, 135 S. Ct. at 556 (recognizing that, should the Supreme Court refuse to review a district court order, which the court of appeals denied leave to appeal, the district court’s incorrect statement 70 of the law would remain impermissibly “frozen in place”); see also Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 99 (1991) (recognizing a court’s fundamental cannot, as obligation to ascertain controlling law). In sum, CashCall’s I representations district court, judicial admission, outstanding CashCall Moses and to us, the by way it of the from her of loan. Moses has have us bankruptcy that balance released to would its abandoned do, court, to counsel’s its Having ignore binding claim for recognized obligations under the the that the loan agreement, I would conclude that Moses’s core claim has been rendered moot. Under this reasoning, we need not decide whether the bankruptcy court erred in refusing to compel arbitration on Moses’s core question of claim, whether and her are instead non-core left claim with must be the narrow referred to arbitration. B. I agree with CashCall that Moses’s non-core claim must be remitted to arbitration, as doing so would not substantially interfere with her efforts to reorganize. 1. The FAA arbitration.’” U.S. 220, 226 “establishes ‘a Shearson/American (1987) (quoting federal Exp., Moses 71 H. policy Inc. Cone v. favoring McMahon, Mem’l Hosp. 482 v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Simply put, it requires agreements courts to “‘rigorously enforce to arbitrate’” by compelling arbitration of all claims contemplated by the arbitration agreement. Id. (quoting Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985)). “Like any statutory directive,” however, the FAA “may be overridden by Congressional a intent contrary to congressional override the FAA’s command.” policy Id. favoring arbitration may be ascertained from (1) the text of the statute, (2) its legislative history, or (3) “an inherent conflict between arbitration and the statute’s underlying purposes.” at 227 (emphasis added). 3 Id. The party opposing arbitration has the burden of showing “Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue.” Id. Applying McMahon, we have considered whether there is an “inherent conflict” between arbitration and the bankruptcy laws justifying the bankruptcy court’s refusal to compel arbitration. In In re White Mountain Mining Co., L.L.C., 403 F.3d 164 (4th Cir. 2005), Joseph Phillips initiated an adversary proceeding in bankruptcy court against White Mountain Mining Company, L.L.C. (“White Mountain”), claiming, inter alia, that money he advanced 3 Moses does not assert that either the text of the Bankruptcy Code or its legislative history demonstrates congressional intent to limit the FAA. See Moses Br. 13. 72 to the company was a debt him. 4 owed to Id. at 167. In response, one of the owners of White Mountain—who asserted that Phillips’s advances to White Mountain were contributions to capital rather than loans—moved the bankruptcy court to compel arbitration of Phillips’s claims, agreement the parties had signed. citing that, determination “because that [he] Phillips’s is arbitration Id. at 166–67. The bankruptcy court denied the motion. reasoned an owed Id. at 167. complaint money by the sought ‘a Debtor,’ it entailed a core proceeding under 28 U.S.C. § 157(b)(2)(B).” This core “presented proceeding, issues that the were bankruptcy ‘critical to It Id. court determined, [White Mountain’s] ability to formulate a Plan of Reorganization,” and therefore “trumped the arbitration.” Id. In a comprehensive opinion by Judge Michael, we affirmed. The court determined that “[t]he inherent conflict between arbitration and the purposes of the Bankruptcy Code is revealed clearly in this case, in which both the adversary proceeding and the [] arbitration involved the core issue of whether Phillips’s advances to the (emphasis added). debtor were debt or equity.” Id. at 170 As found by the bankruptcy court, 4 Phillips also sought a judgment declaring that he did not have to advance any additional money to White Mountain. White Mountain, 403 F.3d at 167. 73 an ongoing arbitration proceeding . . . would (1) make it very difficult for the debtor to attract additional funding because of the uncertainty as to whether Phillips’s claim was debt or equity, (2) undermine creditor confidence in the debtor’s ability to reorganize, (3) undermine the confidence of other parties doing business with the debtor, and (4) impose additional costs on the estate and divert the attention and time of the debtor’s management . . . . Id. The bankruptcy court’s findings, we reasoned, were not clearly erroneous and, indeed, confirmed that arbitration would be “inconsistent with centralize disputes obligations so Id. that the purpose about a of the chapter reorganization can bankruptcy 11 laws debtor’s proceed to legal efficiently.” Because “arbitration would have substantially interfered with the debtor’s efforts to reorganize,” the bankruptcy court did not err in refusing to compel arbitration. Id. 2. Applying White Mountain to Moses’s case, arbitration of her non-core claim under the NCDCA would not substantially interfere with her ability to reorganize. The only way in which the non- core the claim is even related to bankruptcy proceedings is that, if it is successful, the bankruptcy estate will recover additional funds. Moses offers no explanation—and I can conceive of none—as to how an enlargement of the assets in the bankruptcy estate would frustrate creditor distribution otherwise interfere with the bankruptcy proceedings. 74 or Thus, in sum, I agree with CashCall that Moses must arbitrate her noncore claim. C. Finally, I note Moses’s argument, made for the first time on appeal, that her claims may not be referred to arbitration, as no arbitral forum actually exists. Moses claims in particular that “there is no such thing as arbitration conducted by the Cheyenne River Sioux Tribe, there are no tribal representatives authorized to conduct arbitration, and there are no tribal consumer dispute rules.” Moses Br. 2. Tribal arbitration, she asserts, is a “legal black hole,” created “to shield [CashCall’s] illegal court and any American law.” lending scheme from any American Moses Br. 2. These assertions are not without support; this is hardly the first time that CashCall’s practices have been called into serious question. Most recently, in Inetianbor v. CashCall, Inc., 768 F.3d 1346 (11th Cir. 2014), the Eleventh Circuit held that CashCall could not enforce a tribal arbitration agreement, as the agreement required the involvement of the Cheyenne River Sioux Tribe, yet the arbitration proceedings. Tribe would not participate in any Id. at 1350–54; see also id. at 1354– 56 (Restani, J., concurring) (explaining that she would refuse to compel arbitration because the agreement to arbitrate was both procedurally and substantively unconscionable). 75 Likewise, in Jackson v. Payday Fin., LLC, 764 F.3d 765 (7th Cir. 2014), the Seventh Circuit held that CashCall, along with other payday lenders, could not enforce calling it a “sham.” a tribal arbitration Id. at 768, 779. agreement, The Seventh Circuit determined that the agreement was procedurally and substantively unconscionable because the Cheyenne River Sioux Tribe “has neither a set of procedures for the selection of arbitrators nor one for the conduct of arbitral proceedings” and there “was no prospect ‘of a meaningful and fairly conducted arbitration.’” Id. at 778–79; see also National Association of Consumer Bankruptcy Attorneys Br. 2–3 (stating that at least seventeen states have initiated formal proceedings to stop CashCall’s operations from affecting their residents, more than ten states have issued cease and desist orders against CashCall’s internet lending operations, and several states have determined that CashCall’s loans are void in whole or in part). I do not hesitate to observe the odiousness of CashCall’s apparent practice of using tribal arbitration agreements to prey on financially distressed consumers, while shielding itself from state actions to enforce consumer protection laws. Nor do I blink at the underlying motivations of CashCall’s transparently tactical decision to withdraw its proof of claim in this case as a means to pretermit the adversary proceedings. Yet, unlike the above cited cases, this case does not call upon us to determine 76 whether Moses’s arbitration agreement is unenforceable on its face. Because Moses never raised this issue in the proceedings below, we lack any factual record upon which to make such a ruling. I note that nothing contained in this opinion would impair Moses’s ability to raise the issue of unconscionability (and any other alleged bar to arbitration of her damages claims under North Carolina law) upon further proceedings in any action against CashCall. III. For the reasons stated above, I would reverse in part, vacate in part, and remand this case with instructions that the district court reverse the bankruptcy motion to compel arbitration. court’s denial of the I am pleased that that is the ultimate result reached by the panel. 77
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